Lockheed Martin 2003 Annual Report Download - page 28

consultants for Titan or its subsidiaries directly or indirectly to for-
eign officials. The alleged payments and provision of items of
value, if true, raise questions concerning whether there has been a
violation of the Foreign Corrupt Practices Act. We also are review-
ing with Titan whether payments made by Titan to consultants were
accurately reflected on Titan’s books and records. Our review is
ongoing. Together with Titan, we disclosed the allegations to the
SEC and the Department of Justice. During that meeting,
Lockheed Martin and Titan were informed that the Department of
Justice has initiated a criminal inquiry into this matter.
Closing of the Titan transaction is subject to approval of Titan’s
stockholders, the absence of any material adverse change in Titan
and other conditions set forth in the merger agreement. Either
Lockheed Martin or Titan may terminate the merger agreement if
the merger is not completed by March 31, 2004, provided that the
party seeking to terminate the agreement is not then in material
breach of its obligations under the merger agreement in a manner
that has contributed to the failure to consummate the merger. The
full text of the merger agreement is publicly available as an attach-
ment to the proxy statement/prospectus mailed to Titan stockhold-
ers and as an exhibit to Lockheed Martin’s 2003 Form 10-K.
On an ongoing basis, we plan to continue to explore the sale of
various non-core businesses, passive equity investments and surplus
real estate. If we were to decide to sell any such holdings or real
estate, the resulting gains, if any, would be recorded when the trans-
actions are consummated and losses, if any, would be recorded
when they are probable and estimable. We also continue to review
our businesses on an ongoing basis to identify ways to improve
organizational effectiveness and performance, and to focus on our
core business strategy.
RESULTS OF OPERATIONS
Since our operating cycle is long-term and involves many types of
development and production contracts with varying production
delivery schedules, the results of operations of a particular year, or
year-to-year comparisons of recorded sales and profits, may not be
indicative of future operating results. The following discussions of
comparative results among periods should be viewed in this context.
Continuing Operations
The following discussion of net sales and operating results will
provide an overview of our operations by focusing on key ele-
ments set forth in our “Consolidated Statement of Operations.” The
“Discussion of Business Segments” which follows, will review the
contributions of each of our business segments to our consolidated
results for 2003, 2002 and 2001.
For 2003, net sales were $31.8 billion, a 20% increase over
2002 sales. Sales for 2002 were $26.6 billion, an increase of 11%
compared to 2001. Sales increased in all segments as compared to
the prior year for the second straight year. The U.S. Government is
our largest customer, accounting for about 78% of our sales for
2003, compared to 80% in 2002 and 78% in 2001.
For 2003, 2002 and 2001 the items in the table below, among other
things, were included in “Unallocated Corporate (expense) income, net”
(see the related “Discussion of Business Segments” below).
Operating Net (Loss)
(Loss) (Loss) Earnings per
(In millions, except per share data) Profit Earnings Diluted Share
YEAR ENDED DECEMBER 31, 2003
Loss on early retirement of debt $(146) $ (96) $(0.21)
Charge related to exit from
the commercial mail
sorting business (41) (27) (0.06)
Gain on partial reversal of
Space Imaging guarantee 19 13 0.03
Gain on sale of the commercial IT
business 15 8 0.02
$(153) $(102) $(0.22)
Lockheed Martin Corporation
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 2003
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